Sadly, there are all too many indications that the Fed together with its counterparts abroad might have landed us yet again in a global asset and credit market bubble, much as they did in the run-up to the September 2008 Lehman crisis.

It is not simply that the American and global equity market valuations are now at very lofty levels, or that global government bond yields are at record lows and housing prices in many global markets show clear signs of frothiness. It is rather also that credit has been extended to very risky borrowers, like those in the U.S. high-yield market and in the emerging markets, at interest rates that do not nearly compensate the lender for the risk that those borrowers might eventually default on their loans.

]]>http://www.1913intel.com/2017/07/29/watch-out-for-popping-bubbles/How Long Can China Ignore Its Growing Debt Pile? | The National Interesthttp://feedproxy.google.com/~r/1913intel/IHtJ/~3/NEyN-yy4kSs/
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In May, Moody’s Investors Service downgraded China’s credit rating for the first time in nearly three decades due to concerns over its addition to debt.

“The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government,” the U.S. credit-rating agency explained.

]]>http://www.1913intel.com/2017/07/29/how-long-can-china-ignore-its-growing-debt-pile-the-national-interest/George Friedman on China and India Standoff – Could it Lead to War? – YouTubehttp://feedproxy.google.com/~r/1913intel/IHtJ/~3/WSFZtwMh3ng/
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China and India are in the midst of a standoff in the Himalayas. Could the current situation escalate into a military confrontation? George Friedman explains his perspective. Visit Geopolitical Futures at https://geopoliticalfutures.com/.

Right now the answer regarding war appears to be no. They are not going to war.

Notice how China is pushing all around its periphery: South China Sea, East China Sea and now the Himalayas. China is moving toward a dictatorship as its economy continues to weaken. One has to think that eventually something is going to happen that will cause an escalation in conflict.

The US House of Representatives has with an overwhelming majority passed a bill reinforcing sanctions on Russia, Iran and North Korea, and the Senate seems ready to approve the bill this week. Russian state news agencies report that US President Donald Trump may have no other option but to sign the bill, though it will bar him from easing sanctions without Congressional approval in the future (Interfax, July 27). The Russian reaction to the new sanction legislation has been extremely angry: Trump has been accused of being too weak to control the “Russophobic US establishment.” The media has claimed that the Kremlin has been extremely tolerant in its response to “US provocations,” expecting that Trump would eventually put his act together and change the “negative dynamic of the US-Russian relations” as he promised during his presidential election campaign in 2016. However, the US Congress now seems to have made that impossible, while Trump himself has been making one mistake after another. The mass-circulation daily Moskovsky Komsomolets implies that Trump may have been a good real-estate manager, but he seems not to be up to the level of running the US presidency and his administration is constantly in crisis. Moscow had previously given up any hope to improve relations with Washington during the Barack Obama administration. It waited for a replacement administration to emerge and had high hopes placed on Trump that seem now to be teetering out—the United States apparently is unwilling to rebuild relations while Russian President Vladimir Putin is in power; both Moscow and Washington treat each other as enemies and are falling back to military-based mutual deterrence mode (MK.ru, July 26).

– India will back down from its standoff with China only if Indian Prime Minister Narendra Modi has room to portray the resolution as a diplomatic victory to his political constituents back home.
– New Delhi won’t have the means, however, to alter China’s strategy in its periphery, even if it can temporarily halt construction on Beijing’s road project in Bhutan.
– To defend against China’s encroachment, New Delhi will bolster its defensive and infrastructure capacity along its northeastern border.

Earlier this month, North Korea tested an intercontinental ballistic missile capable (ICBM), capable of reaching Alaska. It is believed that Pyongyang now has enough nuclear material for up to 30 nuclear weapons, missiles that can easily range U.S. bases and allies in Asia, and, in a couple of years, it will possess an ICBM capable of holding at risk the continental United States. This would make North Korea only the third U.S. adversary (after Russia and China) with the ability to threaten nuclear war against the United States and its allies.

]]>http://www.1913intel.com/2017/07/28/north-korea-tested-an-icbm-iran-is-next-tablet-magazine/China’s Base in the Horn of African Has a Huge Underground Bunker – The Drivehttp://feedproxy.google.com/~r/1913intel/IHtJ/~3/tEhmeCboUXc/
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Fresh satellite imagery of China’s new military base in Djibouti shows it is significantly more complex, with a large underground component, and an expansive defensive perimeter, than originally thought. The new details only underscore the importance of the facilities and the likelihood that they will serve as more than just a logistics hub for future Chinese operations.

Geopolitical analysis firm Stratfor published the images, which it obtained though another partner, AllSource Analysis, which showed the site in the Horn of Africa as it existed on April 2 and July 4, 2017. The annotated images specifically highlighted new 25 foot wide walls, as well as guard posts and fences. For what is ostensibly a naval facility, there’s a notable lack of docks directly adjacent to any of the facilities. But the most impressive feature by far is a massive underground complex covering an estimated area of nearly 250,000 square feet.

“There’s been a lot of talk about Russia as a competitor, a country that sees the liberal international order as something they don’t necessarily subscribe to, that is actively engaged in trying to undermine US influence in various areas around the world, and that has [the] capability to do it,” Collins said at a security forum in Aspen, Colorado.

“I would argue China applies to all three of those as well, and increasingly has more power to do far more about that issue.”

Collins noted that while Russia has been creating problems for the United States internationally, Moscow also finds US-China tensions to its liking.

Iran’s financial system is a black hole, and the government cannot refinance its arrears, recapitalize its bankrupt banks, and finance a substantial budget deficit at the same time. Its infrastructure requirements are not only urgent, but existential. The country’s much-discussed water crisis threatens to empty whole cities and displace millions of Iranians, particularly the farmers who consume more than nine-tenths of its disappearing water supply. Despite what the Tehran Times called “a desperate call for action” by Iranian environmental scientists, the government slashed infrastructure spending by two-thirds during the last fiscal year.

]]>http://www.1913intel.com/2017/07/27/why-has-iran-wrecked-its-economy-to-fund-war-in-syria-asia-times/How India and China Have Come to the Brink Over a Remote Mountain Pass – The New York Timeshttp://feedproxy.google.com/~r/1913intel/IHtJ/~3/0h_NeGflhUQ/
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The conflict shows no sign of abating, and it reflects the swelling ambition — and nationalism — of both countries. Each is governed by a muscular leader eager to bolster his domestic standing while asserting his country’s place on the world stage as the United States recedes from a leading role.

Jeff M. Smith, a scholar at the American Foreign Policy Council who studies Indian-Chinese relations, said a negotiated settlement was the likeliest outcome. But asked whether he thought the standoff could spiral into war, he said, “Yes I do — and I don’t say that lightly.”